OTTAWA — Prime Minister Mark Carney’s ambitious spending promises earned standing ovations from Canada’s defense industry this week. Now he faces his next challenge: turning those promises into contracts.
“My business depends on it being faster, and jobs and investment depend on it being faster,” Eliot Pence, the founder of Ottawa-based startup Dominion Dynamics, told POLITICO of the procurement process.
The pressure is on after a record-setting CANSEC wrapped in Ottawa this week, with roughly 15,000 delegates at the military trade show buoyed by Ottawa’s commitment to NATO's spending benchmark and Carney's pledge to build a stronger domestic defense industry.
But some companies on the trade floor said the government's ambitions have yet to translate into procurement plans, with few details about what equipment, technology and services Ottawa plans to buy — or how it intends to turn those pledges into contracts.
Pence said that although his company has tested its communication technology platform with Canadian Forces personnel on Arctic exercises, it has yet to translate into a signed contract — or a path to one.
“I want a clear ramp to how we get from R and D to an actual procurement within the course of 12 months,” Pence said. “I want clear evidence that that contracting structure exists, that there is a path to how to do that.” He added: “I don't really care about money. I don't care about contract size. I just care about whether or not we have that structure in place. It does not appear to exist as of today.”
Carney used his CANSEC appearance to announce that Canada plans to reach 4 percent of GDP on defense spending by 2030, in pursuit of NATO’s new 5 percent goal by 2035.
Taking media questions after his speech, he pushed back against the idea of spending for spending’s sake.
“What we don't want to do is take a list that was sitting in the drawer from … even last year, and say, ‘Okay, we'll take that’ — that will be the wrong decision,” Carney said.
“There's a series of other investments that we can make that will help protect Canadians, first and foremost, help our allies,” he added.
Former Conservative defense critic Erin O’Toole, a retired air force helicopter navigator, said Carney is saying all the right things on defense spending. But he cautioned that if that doesn’t translate into dollars spent soon, the industry will lose confidence.
O’Toole, also a former Conservative party leader, recently joined Carney’s advisory council on Canada-U.S. relations. He said the confidence piece is especially important for the small- and medium-sized companies Carney is trying to attract to the defense sector to build up dual-use civilian and military products and technology.
“We need to see some Canadian small and large players receiving contracts from their government,” O’Toole said in an interview between stops at CANSEC booths Thursday.
“Because, you know what, they can't sell overseas until they've been able to say our own government buys our technology and believes in what we're doing.”
Christyn Cianfarani, the president of the Canadian Association of Defence and Security Industries, which organized CANSEC, said the excitement and enthusiasm from Carney’s appearance and his increased defense spending is being tempered by concern over whether the government can actually deliver.
“Business actually needs to see what they're going to spend money on,” Cianfarani told POLITICO at the end of the two-day event. “The industry, by nature, is quite cynical. We have lived through promises, and then actions not reflecting the actual ambition.”
Cianfarani said the government must provide “a refreshed investment plan” with specifics on the military needs, by this fall. “Time is running out for that,” she said.
The government’s Defence Industrial Strategy identified 10 strategic military capabilities.
“They’re so broad,” Cianfarani said.
The industry wants specifics, she said. “We're talking about getting down to the tactical level, about truly where they're going to need services, or where they're going to need human capital, and then where they're also going to buy assets.”
Carney reiterated this week that his new Defence Investment Agency will be responsible for making speedy and well-considered spending decisions. He’s appointed former international financier Doug Guzman to be its chief executive.
Late last year, Defense Minister David McGuinty told POLITICO he’d convened about a dozen venture capitalists for a meeting with Department of National Defence and Canadian Armed Forces leaders — a first-of-it-kind gathering — to brainstorm.
“Once we pull this together, we will sprinkle a little bit of catalytic dust, and I am convinced this will take off,” McGuinty said at that time.
This week, Pence was skeptical about the pace of such ambition.
“I've never met with McGuinty. I've never met with Doug Guzman face to face. I don't think I ever met any of the ADMs [assistant deputy ministers] face to face,” said Pence.
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